Summary
This report identifies three areas where the Alberta Securities Commission (ASC or Commission) can strengthen its management control systems and processes for enforcing Alberta’s securities laws.
Objective and Scope
Our objectives for this audit were to determine:
a) If ASC’s enforcement system adequately:
- identifies and tracks matters that ASC should investigate,
- effectively prioritizes investigations,
- determines the scope of investigations and methodology,
- maintains independence of investigations,
- develops recommended actions,
- adequately records key decisions and conclusions at the appropriate level of authority, and
- measures and reports on the effectiveness of securities law enforcement.
b) The adequacy of ASC’s human resource processes to recruit, select and train staff for enforcement roles, as well as its processes to direct concerns and issues to the appropriate management level.
c) The role of Commission Members in the enforcement process and the training they receive to help them carry out their responsibilities.
Conclusion
This report contains five recommendations designed to improve the enforcement system. Considering the regulatory environment in which ASC operates, the enforcement system must be rigorous enough to ensure that all evidence and information obtained through enquiries, discussions and analysis during the enforcement process is recorded and adequately reviewed. Files must clearly indicate the conclusions reached on an enforcement matter and the supporting rationale for the conclusions. The Commission’s leadership must not tolerate anything but the highest standards of regulatory behaviour.
Generally, we concluded that the enforcement system needs more discipline. Management needs to:
- review and clarify enforcement policies, guidelines and standards,
- ensure more consistency in enforcement processes, particularly in the recording of information gathered through enquiries, discussions and analysis to support conclusions and recommendations,
- improve controls in the enforcement system to ensure enforcement decisions are independently reviewed and files are brought to a conclusion in a timely manner, and
- measure and report on the effectiveness of the enforcement system.